Medicaid Myths vs. Facts

Medicaid is a critical safety net for millions of Americans, providing health coverage to low-income individuals and families. However, when it comes to understanding Medicaid and its implications—especially regarding long-term care—many misconceptions abound.

These myths can lead to confusion, especially for those considering Medicaid as part of their estate planning or elder care strategies. In this blog, we’ll address some of the most common myths and provide clarity on the facts.

Fact: Medicaid does not "take" your home when you apply for coverage. However, Medicaid may place a lien on your property to recover costs for long-term care after your death, a process known as estate recovery.

In many cases, exemptions apply, particularly if your spouse or a disabled or minor child continues to live in the home. Planning ahead through legal strategies can help protect your home.

Myth 2: You Have to Be Completely Broke to Qualify

Fact: While Medicaid is intended to help those with limited financial resources, you don’t have to be entirely without assets to qualify. Medicaid eligibility depends on both income and asset limits, but there are also several spend-down strategies and exemptions for specific assets, like your home, car, and certain personal belongings.

Working with a qualified attorney can help ensure you understand how to qualify without jeopardizing your financial security.

Myth 3: Once You Qualify for Medicaid, You Can Give Away Assets

Fact: Medicaid has a five-year look-back period that reviews asset transfers. If you give away assets or sell them for less than fair market value during this period, you could face penalties, including disqualification for Medicaid benefits for a period of time.

It's important to work with an estate planning attorney to ensure that any asset transfers are done properly and well in advance of needing Medicaid.

Myth 4: Medicaid Only Covers Nursing Home Care

Fact: Medicaid covers a wide range of long-term care services, including in-home care, assisted living, and adult day care programs, depending on the state and the individual's needs.

Many people prefer to age in place, and Medicaid's Home and Community-Based Services (HCBS) waiver programs provide options to receive care in the comfort of their own homes or in less restrictive environments than a nursing home.

Myth 5: I’ll Lose My Medicaid If My Income Changes

Fact: Medicaid eligibility is income-based, but that doesn’t mean you automatically lose coverage if your financial situation improves. Depending on the state, there may be Medicaid “spend-down” programs that allow you to deduct certain medical expenses from your income to remain eligible.

Additionally, there are Medicaid buy-in programs for working individuals with disabilities who can pay premiums to maintain Medicaid coverage.

Myth 6: Medicare Will Cover Long-Term Care, So I Don’t Need Medicaid

Fact: Medicare provides very limited coverage for long-term care. It may cover up to 100 days in a skilled nursing facility under certain conditions, but it does not pay for custodial care (the type of care most often needed for chronic conditions like dementia).

Medicaid is the primary payer for long-term care services, making it an essential part of the planning process for those who might need care beyond what Medicare covers.

Myth 7: I Don’t Need to Plan for Medicaid Until I’m Older

Fact: Waiting too long to plan for Medicaid can severely limit your options. Because of the five-year look-back period, any gifts or asset transfers made within five years of applying for Medicaid can lead to penalties.

Proactive planning, such as establishing irrevocable trusts or gifting strategies, should ideally begin well before care is needed. Early planning allows more flexibility in protecting assets and qualifying for Medicaid.

Myth 8: Medicaid is Only for Poor People

Fact: Medicaid serves individuals from various financial backgrounds, particularly when it comes to long-term care.

Many middle-class families find themselves needing Medicaid to cover the high cost of nursing homes or in-home care services, which can quickly deplete savings. With proper planning, individuals can protect their assets while still accessing the care they need.

Final Thoughts

Understanding Medicaid’s complexities is essential for anyone considering it as part of their long-term care plan. Myths and misinformation can cause unnecessary stress and may lead to missed opportunities for asset protection and care planning.

Working with a knowledgeable estate planning attorney can help you navigate the intricacies of Medicaid and ensure your assets are safeguarded while receiving the care you or your loved ones need.

If you have questions or concerns about Medicaid and estate planning, don’t hesitate to reach out. Our team is here to help you understand your options and guide you through the process.